In 2024–2025, Cambodia’s foreign direct investment (FDI) landscape has tilted dramatically — with investors from the People’s Republic of China now supplying more than half of all new FDI capital. According to the Council for the Development of Cambodia (CDC), Chinese FDI reached US$34.25 billion, or roughly 49.83% of total registered investment capital for the year.
In the first month of 2025, Chinese investors injected around US$550 million into Cambodia’s industrial sector alone — representing 73.35% of all newly-registered capital that month.
These numbers point to a structural shift: China is no longer just a major player — it is the dominant driver of Cambodia’s FDI boom. This article dives into why this is happening, which sectors are most affected, what economic benefits and risks it brings, and what it means for Cambodia’s long-term development.
1. Snapshot of Chinese FDI in Cambodia — Data & Trends
📈 Recent Data — Chinese Investment Share
- In 2024, Chinese investment accounted for nearly 50% of total FDI capital registered by the CDC.
- From 2018–2023, Cambodia attracted about US$48.4 billion in FDI total; of that, 45.6% came from China.
- In the first half of 2025, the CDC approved 373 projects with US$5.8 billion fixed-asset value — and Chinese investors accounted for 56.23% of that newly approved investment capital.
- Across sectors, the lion’s share of approved investment (2025 data) — roughly 70% — goes into industry and manufacturing, followed by infrastructure, real estate, energy and others.
🔍 Why This Surge Matters
This level of dominance is more than a statistical milestone: it reshapes how Cambodia receives capital, where growth happens, and who shapes development. Long-standing trends of donor-driven financing are being replaced by equity-based Chinese direct investment. This shift affects labor markets, industrial capacity, export composition, regional development and economic sovereignty.
READ MORE: Cambodia FDI Surges 47%, Approving $9.5 Billion in Investment Projects
2. What’s Driving the Surge — Push & Pull Factors
2.1 Strategic Economic & Political Alignment
Cambodia and China share increasingly close political and economic ties. Cambodian authorities often highlight China’s role in supporting national infrastructure, industrialization, and development — which gives Chinese investors confidence and preferential treatment in many approval processes.
The regulatory environment has become more investment-friendly: fast-track approval processes, simplified application (online submission), and supportive government-private coordination.
Moreover, Cambodia’s membership in regional and bilateral trade agreements — including the Cambodia–China Free Trade Agreement (CCFTA) and Regional Comprehensive Economic Partnership (RCEP) — improves market access and makes Cambodia a strategic base for Chinese firms seeking to export to multiple markets.
2.2 Cost Arbitrage & Manufacturing Attractiveness
Cambodia offers lower labor and operational costs than China, while still providing tariff-free or preferential access to global markets. For Chinese manufacturers facing rising domestic costs and trade friction, relocating factories to Cambodia becomes attractive. Analysts note that export-driven global demand and supply-chain shifts — especially in garments, footwear, and electronics — align well with Cambodia’s manufacturing potential.
2.3 Boom in Industrial Approvals & Project Pipeline
In the first ten months of 2025 alone, the CDC approved US$9.2 billion in fixed-asset investment across 575 new projects — a 67% increase over 2024. China remains the top investor.
The mix of projects spans manufacturing, infrastructure, renewable energy, and real estate — indicating diversification beyond traditional sectors, and creating incentives for continued Chinese investment.
3. Sector-by-Sector Breakdown: Where Chinese Capital Goes
3.1 Manufacturing & Industrial Zones
- Sector dominance: In 2025, roughly US$5.3 billion of approved FDI was directed to industry/manufacturing — including garments, textiles, footwear, electronics, and assembly.
- Special Economic Zones (SEZs) and industrial parks — often Chinese-backed — remain the engines of growth, offering infrastructure, logistics, and tax/investment incentives for export-oriented factories.
- Employment boost: The surge in manufacturing FDI pushes job creation, bringing work opportunities to thousands of Cambodian workers across provinces.
3.2 Infrastructure, Energy & Real Estate
- Infrastructure: Chinese capital helps build critical transport, port, and logistic facilities — enabling better connectivity for trade and manufacturing.
- Energy: As Cambodia expands power generation, some Chinese-backed projects target energy or utilities — supporting both industry and domestic demand.
- Real estate & urban development: Chinese-funded real estate projects — residential, commercial, and mixed-use developments — contribute to urbanization and absorb investment flows beyond manufacturing.
3.3 Export & Trade Integration
China’s investment not only funds factories but integrates Cambodia into regional and global supply chains. For instance, as Cambodia–China trade volumes rise (over US$15 billion in 2024), Chinese-owned Cambodian factories help produce and export goods efficiently.
By leveraging trade agreements (CCFTA, RCEP), Cambodian exports enjoy preferential access — giving Chinese investors extra incentive to locate production in Cambodia.
4. Economic Upsides — What Cambodia Gains
✅ Job Creation & Skills Transfer
- The boost in manufacturing and infrastructure projects creates thousands of jobs — from factory workers to skilled laborers, logistics staff, and construction workers.
- Through technology and management transfer, some factories bring new standards, potentially improving local skills and production capacity over time. Chinese investment often brings not just capital but machinery, expertise, and export-oriented production practices.
✅ Increased Export Capacity & Economic Growth
- The surge in FDI supports Cambodia’s export-oriented industries — especially garments, footwear, textiles, and electronics — enhancing output and export volumes.
- Infrastructure and energy investments help reduce costs, improve logistics, and facilitate industrial growth, supporting long-term economic development.
✅ Infrastructure Development & Urbanization
- Real estate, energy, and infrastructure projects backed by Chinese capital help modernize cities, improve utilities, and expand industrial zones — potentially boosting living standards and economic diversification.
✅ Attraction of More Investment & Potential Greenfield Growth
- According to fDi Intelligence, Cambodia tops Asia–Pacific in the Greenfield FDI Performance Index 2025 — highlighting its attractiveness for new projects and potential for future foreign investment.
- Given the strong base of Chinese FDI, Cambodia could leverage this momentum to attract other regional investors, creating a more robust, diversified investment ecosystem.
5. The Risks & Costs of Overdependence on China
⚠️ Economic Vulnerability & Lack of FDI Diversification
- With more than half of FDI coming from a single country, Cambodia risks over-dependence — a slow-down or policy shift in China could significantly impact investment flows.
- The long-term stability of such concentrated investment is uncertain, particularly if global economic conditions or China’s external investment priorities shift.
⚠️ Quality & Sector Concentration: Low-Value Investments
- Much of the inflow goes into manufacturing, real estate, and infrastructure — sectors with lower value-added compared to high-tech or service-based industries, which may limit Cambodia’s long-term economic upgrading potential.
- The concentration in a few sectors increases exposure to demand shocks, global supply-chain disruptions, and changing international trade policies (e.g., tariffs).
⚠️ Geographic and Social Imbalance
- The distribution of new projects is uneven: provinces like Kampong Speu and Svay Rieng receive a large share, while many remote or rural provinces get little to no investment — leading to regional inequality.
- Overemphasis on quantity (number of projects) rather than quality — some investments may not translate into sustainable jobs, skill development, or local value-addition.
⚠️ Sovereignty, Governance & Environmental Concerns
- Heavy reliance on foreign capital, especially from a dominant partner, may influence national policy or reduce bargaining power over project terms.
- Risks of low-transparency projects, weak regulation enforcement, land-use conflicts, environmental degradation, or social issues if large-scale developments are not properly managed. Observers have warned about these challenges in some Chinese-backed real estate and development projects.
6. Geopolitical & Global Context: Why China Is Looking at Cambodia
🌐 Supply-Chain Diversification & Trade Tensions
Global trade tensions — tariff wars, supply-chain disruptions, rising labor costs in China — are pushing Chinese firms to relocate manufacturing abroad. Cambodia’s favorable labor costs, trade agreements (CCFTA, RCEP), and political alignment make it a natural candidate.
Chinese firms increasingly view Cambodia as a “China + 1” strategy hub — allowing them to keep close economic ties to their home base while diversifying risk and capturing export markets.
🛠️ Strategic Infrastructure & Long-Term Influence
China’s investment in Cambodia isn’t purely economic — infrastructure, industry, energy, and real estate investments all deepen its strategic footprint in Southeast Asia. Officials highlight the social and economic benefits in terms of jobs, poverty reduction, and regional integration.
Such investments support China’s broader regional ambitions — integrating Cambodia into Chinese-led economic and logistic corridors, and strengthening bilateral influence via deeper economic dependencies.
7. Case Studies & Recent Examples
✅ Industrial Surge — January 2025: US$550M Injection
In January 2025 alone, Chinese investors contributed roughly US$548.65 million, or 73.35% of Cambodia’s newly registered FDI capital for the month. The investment primarily went into manufacturing and industrial projects.
This early-year injection signals a strong commitment and suggests continued momentum through 2025.
✅ Broader 2025 Investment Pipeline — 575 Projects with US$9.2B Approved
Between January and October 2025, the CDC approved 575 investment projects totaling US$9.2 billion — across manufacturing, renewable energy, infrastructure, tourism, agriculture, and agro-industry. China remained the largest source of foreign capital.
The scale and diversity of this pipeline reflect Cambodia’s evolving economy — no longer just garments and textiles, but energy, infrastructure, agro-industry, and broader industrial diversification.
✅ Manufacturing & Export Boost — Greenfield FDI Index 2025
Per fDi Intelligence’s Greenfield FDI Performance Index 2025, Cambodia ranked first in the Asia–Pacific region, thanks largely to Chinese-led greenfield projects, especially in manufacturing.
This recognition elevates Cambodia’s profile globally, attracting further investors and creating potential for higher-value production and export capacity.
8. What This Means for Cambodia’s Future — Strategy, Risks & Opportunities
🔄 Need for FDI Diversification
- Cambodia should actively seek FDI from other countries (ASEAN, Korea, Japan, Europe) to reduce dependency on a single partner.
- Encourage high-value, high-tech, and service-based investments — not just manufacturing and infrastructure — to promote economic upgrading.
🏛️ Strengthening Governance, Regulation & Transparency
- Improve institutional capacity for project approval, environmental and social safeguards, labor rights, and contract transparency.
- Ensure balanced regional development — incentivize investments in under-invested provinces, not just hotspots.
📈 Invest in Human Capital & Value Addition
- Use foreign investment as a platform to build local skills, technology transfer, and domestic supplier capacity.
- Encourage partnerships or joint ventures, rather than 100% foreign ownership, to increase domestic participation.
🌱 Embrace Sustainable & Green Investment — Not Just Fast Growth
- Promote renewable-energy, clean-production, and sustainable infrastructure rather than resource-intensive or speculative real-estate developments.
- Leverage trade agreements (CCFTA, RCEP) to boost export-oriented manufacturing with environmental standards — capturing global green supply-chain demand.
Conclusion: China’s FDI Boom — Opportunity and Strategic Challenge
China’s dominance of Cambodia’s FDI — contributing over half of new investment capital — represents both a powerful engine for growth and a strategic inflection point. The influx of capital has accelerated manufacturing growth, infrastructure development, export capacity, and job creation.
Yet this dominance also raises serious questions about economic dependency, diversification, social equity, and long-term sustainability. Without a deliberate strategy to balance foreign inflows, strengthen governance, and diversify partners, Cambodia risks being overly reliant on a single country’s economic fortunes and policy decisions.
For Cambodia to transform the FDI boom into sustainable, inclusive development, it must chart a careful path forward — leveraging Chinese capital where beneficial, but also building domestic capacity, institutional integrity, and a diversified investment base.
Call to Action: What Stakeholders Should Do Next
- Policymakers & Regulators: Develop and enforce transparent regulations, environmental and social safeguards, and promote diversified FDI sources.
- Investors & Developers: Consider long-term partnerships, value-added production, and responsible investment rather than speculative real estate or low-value manufacturing.
- Business Leaders & Exporters: Leverage increased capacity and infrastructure to boost exports, but invest in training, technology, and sustainable practices.
- Civil Society & Communities: Engage in monitoring, demand accountability, and advocate for equitable, regionally balanced development.
Cambodia stands at an economic crossroads — with Chinese capital powering much of today’s growth. If managed wisely, this boom can bring lasting prosperity. If mismanaged, it may entrench dependencies and inequalities. The choices made now — by government, investors, and society — will shape the nation’s economic trajectory for decades.
References
- AKP – Agence Kampuchea Presse
“China Maintains Top Position as Cambodia’s Largest Foreign Investor.”
https://www.akp.gov.kh/post/detail/325941 - Khmer Post Asia
“China Pumps $550M into Cambodia’s Industrial Sector.”
https://en.khmerpostasia.com/2025/02/07/china-pumps-550m-into-cambodias-industrial-sector/ - Xinhua / english.news.cn
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https://akp.gov.kh/post/detail/352606 - Cambodianess
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https://cambodianess.com/article/cambodias-fdi-success-story-hides-dependence-on-china-and-weak-institutions - CABI / China-ASEAN Business Information
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https://asianews.network/cambodia-china-bilateral-trade-hit-record-high-in-2024/ - Cambodia Tribune
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https://cambodiatribune.com/chinas-dominance-in-cambodias-foreign-direct-investment-landscape/ - FDI Insider
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https://fdiinsider.com/news/cambodia-attracts-48-4-billion-in-fdi-over-six-years/ - B2B Cambodia (fDi Intelligence)
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https://b2b-cambodia.com/news/cambodia-tops-asia-pacific-in-greenfield-fdi-performance-index-2025/ - East Asia Forum
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https://eastasiaforum.org/2025/11/28/cambodias-rising-fdi-numbers-dont-add-up-to-quality-growth - AKP – CDC Approvals Data (2025)
“Foreign Investment Projects Rise in First Half of 2025.”
https://www.vps.akp.gov.kh/post/detail/341497